Red Road Rising

Can the world survive China’s burgeoning love affair with the automobile?

In 1990 there were just 1 million cars on Chinese roads. 14 years later that number has rapidly risen to 12 million, and this year alone a further 2.4 million new cars will be added.

In itself, that’s a lot of new cars, but the figures take on an altogether greater significance when you realise where this trend might lead. Currently China still only has eight vehicles per thousand residents, whereas Brazil has 122, countries in western Europe have an average of 584, and in the US there are a massive 940 cars for every thousand residents. As Chinese environmentalist Liang Congjie says: ‘If each Chinese family has two cars like US families, then the cars needed by China, something like 600 million vehicles, will exceed all the cars in the world combined. That would be the greatest disaster for mankind.’ But is it realistic to see such a figure being met, or is it just doom-mongering? After all, 85 million Chinese still live on less than 21 cents a day, and a further 500 million get by on less than $2 a day; it’s going to be a long time before they can afford a Hummer. While these people may not be able to afford cars, however, they are already seeing their lives radically altered by their impact. China has 200 million bicycles, but, in thrall to the motor car, cities such as Shanghai are banning bicycles from many streets.

Traditional ways are being pushed aside to make way for the bright shiny new automotive future. The automobile vanguard has already arrived. At the end of September last year Shanghai hosted China’s first-ever Formula One motor-racing event: 150,000 cheering fans packed the city’s recently completed $300m racetrack. The track is part of the new Shanghai International Auto City racing and automotive complex, which is expected to cost $5 billion to complete. Magazines such as Autocar now have Chinese editions. The country’s radio airwaves have become clogged with commercials as advertisers discover a new audience, both captive and wealthy: motorists. And on TV Ford has produced its own programme, which it distributed freely to 18 Chinese stations. Modelled on the endurance game show Survivor, Ford Maverick Beyond Infinity featured a dozen contestants hunting for treasure on a tropical island in a Ford Maverick SUV. The grand prize was, of course, another Maverick. Such largesse from Ford is hardly surprising.

Just like General Motors, the company has stated its belief that by 2025 China will surpass the US (where 17 million vehicles are sold per year) as the largest car market in the world. The government in Beijing agrees: it estimates that by 2020, there will be 140 million vehicles on China’s road. To meet this demand, China has been feverishly laying asphalt. Once completed, its planned new highways will cover an area equivalent to four equatorial laps around the earth. The consequences of this will be far-reaching. Paving 20,000 hectares of agricultural land (the road area needed for a million cars) reduces grain production by 80,000 tonnes. Yet China’s agricultural imports increased by 63 per cent during the first half of 2004 to a record half-year agricultural trade deficit of $3.73 billion. For a country where arable land is already in short supply, any reduction in agricultural land will have devastating consequences.

All over China, cars are shaping the physical landscape: historic neighbourhoods have been torn to the ground to build new roads; forests of roadside billboards have sprung up; and the sprawling outskirts of major cities are undergoing major makeovers as big-box retailers such as Wal-Mart move in. Already the country has the highest number of crash deaths in the world, with more than 100,000 people dying last year alone. (And that figure is five times what it was 20 years ago.) In many of China’s biggest cities half of all air pollution comes directly from cars, and seven of the world’s smoggiest cities are now in China. Despite the fact that Chinese drivers still only generate three per cent of the amount of greenhouse gases that US drivers produce, the country’s growing thirst for oil is where the real problems of the future lie. Until the mid-1990s, China was oil self-sufficient, but not any more. The country is now the number-two consumer of oil worldwide (it overtook Japan in 2003). Chinese demand has accounted for 40 per cent of the world’s total oil growth since 2000, and by 2020 China is expected to need eight million more barrels of oil per day. With less than two per cent of the world’s oil reserves, most of this will have to be imported. (Even after this huge increase China will still only consume two thirds the amount of oil the US guzzles, despite the fact that it is four times the size of America.) China’s Communist Party rulers are becoming increasingly concerned about the security of the country’s oil supply, as was demonstrated by last year’s launch of the National Strategic Oil Reserves Office.

There is similar anxiety in Washington. Some commentators go as far as to suggest that the invasion of Iraq was a response to China’s rapidly expanding appetite for oil. For certain, the invasion annulled a 26-year oil contract China had with Saddam Hussein’s regime. The Washington Post reported: ‘The US is building a network of military bases and diplomatic missions whose main goal is to protect American access to oilfields in volatile places such as Nigeria, Cameroon, Chad and São Tomé and, as important, to deny that access to China.’ Elsewhere, China and Japan have been involved in a bitter competition over rival plans to build a pipeline to export oil from Russia’s Siberian terminus of Angarsk, causing relations between Beijing and Tokyo to seriously deteriorate. China has also resorted to using arms or ‘dual-use technology’ to woo oil-rich countries such as Saudi Arabia and Iran. Meanwhile, it has 4,000 troops in Sudan protecting oil interests there, and has also become friendly with the corrupt regime in oil-rich Gabon. Increased resource requirements have led Chinese companies to scour the globe for more commodities than just oil. Car manufacturing is an industry with a voracious and varied appetite, and automobile companies are among the leading consumers of copper, aluminium, plastics, iron, lead, rubber, vinyl, computer chips and steel.

Notably, China recently became the world’s biggest consumer of steel, iron ore, copper, aluminium and cement, driving commodities prices to record highs. Companies around the world have begun to respond to China’s growing mineral requirements. Reuters has reported that demand from the Chinese automotive sector has prompted Abra Mining to re-open its long dormant and rare lead-only mines in Australia. At the end of last October two additional Australian companies, Mineralogy and International Minerals, signed a £7.8 billion deal to supply China with 12 million tonnes of iron ore a year for the next 25 years. Chinese steel-maker Baosteel has joined forces with Brazil’s Companhia Vale do Rio Doce in a $1.5-billion project to build a steel plant on Brazil’s northern coast, while Chinese aluminium producer Chalco has a partnership with the same Brazilian company to build a $1 billion aluminium refinery also in northern Brazil. China also imports growing amounts of rubber from Thailand, Indonesia and Malaysia, as well as from the brutal regime of Burma.

Does it have to be this way? Optimistic analysts believe China could develop a model hydrogen vehicle-fuelling system. They say, since China’s car market is likely to be the largest in the world within a generation this could revolutionise the world car market, and lead to a hydrogen future. And they point to the fact that the Communist Party has pledged to invest $200m over the next couple of years in hydrogen automotive technologies. Unfortunately, there is little basis for this optimism. Those who portray China as a blank slate for hydrogen-based technology fail to recognise that oil companies are currently lining the country’s highways with traditional petrol stations, that oil refineries are being erected and cars with internal combustion engines built and purchased.

In short, fossil fuel interests are quickly becoming entrenched. And while the government may have invested in hydrogen, it is far from turning away from petrol. In 2000 it ordered cities across the country to abolish 238 different auto-related fees. Likewise, Chinese petrol regulations, while recently strengthened, are still weaker than in Europe and North America. Cars made in China have a fuel consumption rate 10 to 15 per cent higher than those produced by developed countries. In addition, per-vehicle average annual fuel consumption of 2.28 tonnes is 10 to 20 per cent higher than in the US, and 100 per cent higher than in Japan. One reason for higher fuel consumption levels is that Chinese car buyers prefer large sedans with considerable discharge volumes. From 2001 to 2003, annual SUV sales in China doubled to 200,000 vehicles. And subsidised petrol makes filling up cheaper in China than in almost every other oil-importing nation (Chinese petrol is less than one third the UK price).

A decade ago automobiles in China guzzled about 10 per cent of the country’s much smaller total oil usage. Today their proportion of oil consumption is closer to a third, and by the end of the decade cars and light trucks are expected to consume more than 40 per cent of all China’s oil. So long as the country continues along this development path, there’s no reason to believe that cars won’t some day consume as much as half of the country’s oil, or more. In other words, the day their future looks like our present, we’re done for.